The biggest airline carrier in Europe, Air France KLM SA, said in a statement today that its third-quarter profit declined after the company was affected by a pilot strike, which lasted for two weeks. The company also stated it may need to increase its savings, because the bookings are still weak.
The Chief Financial Officer of the bank – Pierre-Francois Riolacci said in a statement, cited by the Financial Times: “There are no drastic or emergency measures which need to be declared. Of course, there has been a strike and the market environment is difficult, so it is quite right to manage things strictly.”
According to the statement, the carriers operating profit over the third fiscal quarter fell from €641 million to €247 million ($315 million). The net profit of the airline carrier fell from €148 million a year ago and amounted to €100 million over the period. Air Frances sales declined by 6.7% to €6.70 billion. The company also explained that pressure on ticket prices will continue as a consequence of the walk-outs, which are considered as the most extensive in Air Frances history.
The two-week pilot strikes affected the company, which has also been suffering from lower bookings over the summer. The impact of these negative events could be a €500-million annual drop to Air Frances earnings before interest, taxes, depreciation and amortization.
This is not the first time, when the company downgrades its projection. Air France reduced its earnings target in July 2014.
The France-based airline carrier is to adapt its investment plans to the situation. The company explained that it is to reduce its divisions expenses faster and manage its portfolio more “dynamically” in order to transfer the earnings impact of the pilots strike.
Air France KLM SA added 1.55% to trade at €6.75 per share as of 12:23 GMT, marking a one-year decrease of 12.75%. The company is valued at €2.00 billion. According to the Financial Times, the 25 analysts offering 12-month price targets for Air France KLM SA have a median target of €8.00, with a high estimate of €12.00 and a low estimate of €2.75. The median estimate represents a 20.37% increase from the last price of €6.65.
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